Q3 FY2026
Filed Nov 9, 2026CECO reports Q3 2026 orders of $777.6 million (up 234 percent) and Adjusted EBITDA of $70.1 million (up 202 percent) after the June 1, 2026 Thermon acquisition; GAAP net loss of $(2.0) million; FY2026 orders and free cash flow conversion outlook raised; FY2027 outlook introduced
The filing prints very large year-over-year growth in orders, revenue, gross profit, non-GAAP net income, Adjusted EBITDA and adjusted free cash flow for the quarter, and the company raised its FY2026 orders and free cash flow conversion outlook. The quarter still shows a GAAP net loss of $(2.0) million, nine-month GAAP net loss of $(37.2) million, rising interest expense and a sharp increase in debt and goodwill from the acquisition.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Orders, Q3 2026other | $777.6M | – | up 234 percent |
| Backlog, September 30, 2026other | $2.19B | – | up 205 percent |
| Net sales (revenue), Q3 2026GAAP | $404,428 thousand (printed as $404.4 million in highlights) | – | up 105 percent |
| Cost of sales, Q3 2026GAAP | $274.3M | – | – |
| Gross profit, Q3 2026GAAP | $130.1M | – | up 101 percent |
| Gross profit margin, Q3 2026GAAP | 32.2 % | – | – |
| Non-GAAP gross profit, Q3 2026non-GAAP | $146.8M | – | up 127 percent |
| Non-GAAP gross profit margin, Q3 2026non-GAAP | 36.3 % | – | – |
| Selling and administrative expense, Q3 2026GAAP | $91.24M | – | – |
| Amortization expense, Q3 2026GAAP | $15.32M | – | – |
| Acquisition and integration expense, Q3 2026GAAP | $12.43M | – | – |
| Other operating expense, net, Q3 2026GAAP | $597K | – | – |
| Income from operations, Q3 2026GAAP | $10.5 million ($10,516 thousand) | – | – |
| Non-GAAP operating income, Q3 2026non-GAAP | $55.7M | – | up $38.2 million or 218 percent |
| Interest expense, Q3 2026GAAP | $11.06M | – | – |
| Other loss, net, Q3 2026GAAP | $2.39M | – | – |
| Income tax (benefit) expense, Q3 2026GAAP | −$1.02M | – | – |
| Net (loss) income attributable to CECO, Q3 2026GAAP | $(2.0) million ($(2,018) thousand) | – | – |
| Non-GAAP net income, Q3 2026non-GAAP | $34.3M | – | an increase of $25.0 million, or 269 percent |
| Diluted EPS, Q3 2026GAAP | $(0.03) | – | – |
| Non-GAAP diluted EPS, Q3 2026non-GAAP | $0.60 | – | – |
| Adjusted EBITDA, Q3 2026non-GAAP | $70.1M | – | an increase of $46.9 million, or 202 percent |
| Adjusted EBITDA margin, Q3 2026non-GAAP | 17.3 % | – | – |
| Net cash provided by operating activities, Q3 2026GAAP | $153.8M | – | – |
| Free cash flow, Q3 2026non-GAAP | $148.4M | – | a $137.3 million improvement |
| Adjusted free cash flow, Q3 2026non-GAAP | $154.4M | – | a $135.4 million improvement |
| Net sales (revenue), nine months ended September 30, 2026GAAP | $895.3M | – | – |
| Cost of sales, nine months ended September 30, 2026GAAP | $614.8M | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $280.5M | – | – |
| Gross profit margin, nine months ended September 30, 2026GAAP | 31.3 % | – | – |
| Non-GAAP gross profit, nine months ended September 30, 2026non-GAAP | $306.7M | – | – |
| Non-GAAP gross profit margin, nine months ended September 30, 2026non-GAAP | 34.3 % | – | – |
| Selling and administrative expense, nine months ended September 30, 2026GAAP | $201.2M | – | – |
| Acquisition and integration expense, nine months ended September 30, 2026GAAP | $68.17M | – | – |
| (Loss) income from operations, nine months ended September 30, 2026GAAP | −$20.79M | – | – |
| Interest expense, nine months ended September 30, 2026GAAP | $24.39M | – | – |
| Net (loss) income attributable to CECO, nine months ended September 30, 2026GAAP | $(37.2) million ($(37,184) thousand) | – | – |
| Non-GAAP net income, nine months ended September 30, 2026non-GAAP | $69.6M | – | – |
| Diluted EPS, nine months ended September 30, 2026GAAP | $(0.81) | – | – |
| Non-GAAP diluted EPS, nine months ended September 30, 2026non-GAAP | $1.52 | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $130.6M | – | – |
| Net cash provided by (used in) operating activities, nine months ended September 30, 2026GAAP | $121.4M | – | – |
| Free cash flow, nine months ended September 30, 2026non-GAAP | $108.5M | – | – |
| Adjusted free cash flow, nine months ended September 30, 2026non-GAAP | $192M | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $72.07M | – | – |
| Total assets, September 30, 2026GAAP | $3.70B | – | – |
| Total shareholders' equity, September 30, 2026GAAP | $2.09B | – | – |
FY2026 updated outlook; FY2027 outlook introduced in the same release outlook
- RevenueFY2026: between $1.300 billion and $1.375 billion (maintained); FY2027: between $2.1 billion and $2.3 billion
- NoteFY2026 Orders: exceed $2.5 billion (raised; previous outlook of at least $2.0 billion)
- NoteFY2026 free cash flow conversion: approximately 100 percent of Adjusted EBITDA (raised; previous outlook of at least 55 percent)
- NoteFY2026 Adjusted EBITDA: between $200 million and $225 million (maintained)
- NoteFY2027 Adjusted EBITDA: between $475 million and $525 million
- NoteFY2027 revenue growth: more than 60 percent at the midpoint compared with the midpoint of the 2026 revenue outlook (company statement)
- NoteFY2027 Adjusted EBITDA growth: more than 130 percent at the midpoint compared with the midpoint of the 2026 Adjusted EBITDA outlook (company statement)
- NoteFY2027 free cash flow: between 50 percent and 60 percent of Adjusted EBITDA
Capital returns
- No share repurchases or dividends are reported in the release.
- Equity awards surrendered by employees for tax liability, net of proceeds from employee stock purchase plan and exercise of stock options: $(11,862) thousand for the nine months ended September 30, 2026 (prior year $930 thousand).
- Noncontrolling interest distributions: $(1,405) thousand for the nine months ended September 30, 2026 (prior year $(1,204) thousand).
What drove it
- Company states the quarter is the second as a combined company following the June 1, 2026 acquisition of Thermon.
- Company attributes strong momentum to growth across diverse end markets, increasing customer demand and operational initiatives, which it says contributed to margin expansion and enhanced cash flow generation.
- Company states it has substantially completed key Thermon integration initiatives and is ahead of schedule on cost and revenue synergies.
- Adjusted free cash flow is stated to be adjusted for cash payments relating to the Thermon transaction made during the quarter.
- Non-GAAP gross profit excludes the purchase accounting inventory valuation adjustment of $16.7 million in Q3 2026 (footnote: included in the quarter's cost of sales per the release).
Concerns
- GAAP net loss of $(2.0) million for Q3 2026 compared with net income of $1.5 million in the prior-year quarter, and GAAP net loss attributable to CECO of $(37.2) million for the nine months.
- GAAP income from operations was $10.5 million in Q3 2026 and $(20.8) million for the nine months, with acquisition and integration expense of $12.4 million in the quarter and $68.2 million for the nine months.
- Interest expense rose to $11,060 thousand in Q3 2026 from $5,054 thousand, and debt less current portion increased to $583,321 thousand from $210,559 thousand at year-end 2025.
- Gross margin on a GAAP basis fell to 32.2 percent in Q3 2026 from 32.7 percent in the prior-year quarter, and to 31.3 percent for the nine months from 34.6 percent.
- Working capital build: accounts receivable rose to $415,494 thousand and prepaid expenses and other current assets to $103,104 thousand from year-end 2025 balances. The nine-month change in accounts receivable is $(134,362) thousand in the cash flow statement.
- Forward-looking statements list the ability to remediate material weaknesses in internal control over financial reporting as a risk factor.
- Forward-looking statements also cite the conflict in the Middle East and supply chain challenges as potential sources of project delay or cancellation.
What to watch
- Conversion of the $2,193.5 million backlog into revenue against the FY2026 revenue outlook of $1.300 billion to $1.375 billion.
- Delivery of the raised FY2026 orders outlook of more than $2.5 billion, including the power market orders the CEO said are anticipated.
- Realization of the FY2027 outlook: revenue of $2.1 billion to $2.3 billion and Adjusted EBITDA of $475 million to $525 million.
- Progress on the cost and revenue synergies the company describes as ahead of schedule, and the level of acquisition and integration expense.
- Gross margin trend on a GAAP basis, including the purchase accounting inventory valuation adjustment, which the company reports separately.
- Debt service: interest expense and the reduction of leverage to 2.0X, along with covenant compliance under the senior secured credit facility as described in the forward-looking statements.
- Remediation of the material weaknesses referenced in the safe harbor statement.
Balance sheet and cash flow
- Current portion of debt $15,999 thousand and debt, less current portion $583,321 thousand at September 30, 2026 (December 31, 2025: $1,879 thousand and $210,559 thousand). Total debt is not printed as a single figure.
- Leverage of 2.0X, a reduction of 0.7X from the closing date of the Thermon acquisition (company statement).
- Cash paid for acquisitions, net of cash acquired: $(437,971) thousand for the nine months ended September 30, 2026 (prior year $(97,615) thousand).
- Borrowings on long-term debt: $235,000 thousand for the nine months ended September 30, 2026 (prior year none printed). Borrowings on revolving credit lines: $384,700 thousand (prior year $185,800 thousand).
- Goodwill $1,506,007 thousand and finite-life intangible assets, net $985,553 thousand at September 30, 2026 (December 31, 2025: $288,163 thousand and $96,966 thousand).
- Billings in excess of costs and estimated earnings on uncompleted contracts: $388,132 thousand at September 30, 2026 (December 31, 2025: $123,726 thousand).
- Accounts receivable, net: $415,494 thousand at September 30, 2026 (December 31, 2025: $172,909 thousand).
- Inventories: $182,887 thousand at September 30, 2026 (December 31, 2025: $53,996 thousand).
- Inventory valuation adjustment (purchase accounting) included in cost of sales: $16.7 million for Q3 2026 and $26.2 million for the nine months ended September 30, 2026, per the release footnote.
Analysis
CECO reported Q3 2026 results that are dominated by the June 1, 2026 acquisition of Thermon. Orders were $777.6 million, up 234 percent, and backlog reached $2,193.5 million, up 205 percent. Net sales were $404.4 million, up 105 percent from $197.6 million. Gross profit was $130.1 million on a GAAP margin of 32.2 percent, compared with 32.7 percent in the prior-year quarter. Non-GAAP gross profit was $146.8 million on a 36.3 percent margin, and the release states that the non-GAAP figure excludes a purchase accounting inventory valuation adjustment of $16.7 million in the quarter.
Below the gross line, GAAP results were weaker. Selling and administrative expense rose to $91,241 thousand from $47,034 thousand, amortization expense to $15,316 thousand from $6,144 thousand, and acquisition and integration expense to $12,430 thousand from $252 thousand. GAAP income from operations was $10.5 million compared with $9.4 million, and interest expense rose to $11,060 thousand from $5,054 thousand. The result was a GAAP net loss attributable to CECO of $(2.0) million, against net income of $1.5 million a year earlier. The adjusted measures moved far more: non-GAAP operating income was $55.7 million against $17.5 million, non-GAAP net income was $34.3 million against $9.3 million, and Adjusted EBITDA was $70.1 million, a 17.3 percent margin, against $23.2 million.
Cash generation improved sharply. Free cash flow was $148.4 million against $11.1 million, and adjusted free cash flow was $154.4 million against $19.0 million. For the nine months, operating cash flow was $121,397 thousand against $(4,100) thousand a year earlier, and free cash flow was $108.5 million. The balance sheet expanded materially: total assets rose to $3,701,156 thousand from $893,769 thousand, goodwill to $1,506,007 thousand from $288,163 thousand, and debt (current portion plus long-term) to $15,999 thousand and $583,321 thousand from $1,879 thousand and $210,559 thousand. The company states leverage is 2.0X, down 0.7X from the closing date of the acquisition. Billings in excess of costs and estimated earnings rose to $388,132 thousand, and accounts receivable to $415,494 thousand.
Guidance moved in both directions. For FY2026 the company raised its orders outlook to exceed $2.5 billion from at least $2.0 billion and raised its free cash flow conversion outlook to approximately 100 percent of Adjusted EBITDA from at least 55 percent. Revenue ($1.300 billion to $1.375 billion) and Adjusted EBITDA ($200 million to $225 million) were maintained. The release introduces FY2027 guidance of $2.1 billion to $2.3 billion in revenue and $475 million to $525 million in Adjusted EBITDA, with free cash flow of 50 to 60 percent of Adjusted EBITDA. The FY2027 ranges imply a sharp step-up that depends on conversion of the current backlog and pipeline, which the company describes as largely on schedule.
The figures that deserve attention are the gap between GAAP and non-GAAP results, the acquisition and integration expense of $68.2 million for the nine months, the rise in interest expense and debt, and the working capital build in receivables and inventories. The release does not report segment revenue, so the mix across end markets cannot be assessed from it.
Management, verbatim
Our strong third quarter results reflect CECO’s leadership in attractive and growing niche markets across a range of resilient industrial end markets.
Todd Gleason, Chairman and Chief Executive Officer
While we are pleased to have delivered more than 100 percent revenue growth and over 200 percent growth in orders, backlog and Adjusted EBITDA during the third quarter, we are even more excited about the future.
Todd Gleason, Chairman and Chief Executive Officer
I would emphasize that demand for our environmental, industrial and thermal solutions remain equally robust and often are realized later in the project supply chain cycle and generally represent funded, active projects rather than speculative demand,
Todd Gleason, Chairman and Chief Executive Officer
Not in the filing
stated, not guessed- No segment or business-line revenue breakdown is reported in the filing.
- No prior-year or prior-quarter figure is printed for orders, backlog, Adjusted EBITDA margin, GAAP operating margin, or non-GAAP operating income for the nine months.
- No prior-quarter (Q2 2026) figures are printed in the release.
- The previous release outlook was not provided, so the vs_prior_guidance comparison is empty. The filing itself states the prior orders outlook (at least $2.0 billion) and prior free cash flow conversion outlook (at least 55 percent), which are recorded in the guidance field.
- Total debt is not printed as a single figure; the current portion and long-term portion are reported separately.
- Year-over-year change for cash, total assets and total shareholders' equity is not printed on a comparable period basis (balance sheet comparison is to December 31, 2025).
- Cost of sales and selling and administrative expense changes (percentage) are not printed.
- No share repurchases or dividends are reported.
- No consensus estimates, analyst expectations or share price reaction are in the documents.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.